Thank you very much for this opportunity. It is a pleasure to be in Beijing, which is truly at the heart of Chinese history. Considering that the city's population has virtually doubled over the last two decades, it seems a very appropriate place to discuss both the consequences of urbanization and the strategic options for addressing the challenges ahead. I thank the National Development and Reform Commission for inviting me to set the stage for today's discussion with some initial thoughts.

It would be fair to say that urbanization is an essential element of economic development. Cities and towns constitute a country's economic, social and cultural backbone, they provide economies of scale, and attract the skills and knowledge needed to push development to a higher level.

Here in the PRC, the trend toward urbanization has been both remarkable and challenging: remarkable, for the sheer speed at which it has occurred, and challenging for the many problems that are accompanying it—environmental degradation, inadequacy of municipal and social services, and increasing inequality, to name just a few.

By the end of 2011, the PRC's urban population surpassed that of its rural areas for the first time. Today, over 50% of the population lives in urban areas. The study we are reviewing today estimates that cities in the PRC will grow by about 15 million people each year and by a total of 230 million over the next 15 years. That's equivalent to adding nearly the entire population of Indonesia today.

Clearly, plans must be put in place to cope with this issue. The urbanization policies developed during the current Five Year Plan will have profound implications for the country's social and economic development far into the future. And decisions made now on urban development and natural resource management will have wide-ranging impacts not only in the PRC, but across Asia and globally.

For decades, rapid industrial growth has driven urbanization in PRC's manufacturing and export centers, especially along the eastern seaboard. Development of industrial land was essential to attracting investors. That is all changing now. As regional transport is developed, the rising cost of labor in eastern cities is pushing many manufacturers to the center of the country. On the other hand, coastal cities are increasingly oriented toward research and development, commerce, and services; an evolution that requires very different land and infrastructure requirements from manufacturing.

There are concerns about the impact on the future form, livability, and environmental quality of Chinese cities. But there are also positive developments, such as the national drive to improve energy efficiency, reduce greenhouse gas emissions, and conserve energy and water resources.

Eastern cities have the opportunity to revitalize existing urban areas as heavy industry moves out, while central and western cities can apply green development principles as they expand. How these cities develop over the next five to ten years will have long-term implications for economic and social development, land management, consumption of natural resources, energy needs, transport, pollution, green house gas emissions, and urban livability in general.

The country's economic transformation and regional development strategies are now reshaping cities in all regions. These strategies are covered in the ADB-supported policy study on “Strategic Options for Urbanization,” being prepared by the NDRC. The study emphasizes the need for improvements in the social safety net for migrant workers living in urban areas. Based on a series of pilot projects in health and education services, social insurance, and social housing, the study recommends harmonizing access to social benefits for all urban residents, regardless of where they are registered.

To date, ADB has provided loans totaling over 4 billion dollars to the PRC in support of improvements to the urban environment, drinking water supply, wastewater treatment, flood management, urban transport, vocational training facilities, and energy supply. We are now actively working with cities on more multifaceted approaches to promote their development as livable, competitive and environmentally attractive urban centers.

We have progressively moved our urban sector operations to the neediest areas—from the eastern provinces to the small cities and towns in the central and western regions. We are also working with NDRC to address more fundamental issues around the country's future urbanization. For example, we're supporting NDRC to develop guidelines for industrial transfer from the eastern seaboard to central and western provinces, incorporating good environmental and social safeguard practices.

We are supporting the creation of low carbon development plans for both Qingdao City and Yunnan Province to tackle energy use in high-energy consuming industries and reduce green house gas emissions in other sectors, such as transport and forestry.

And we are increasing our support for technical vocational training, with respect to both policy and directly with select provinces. The aim of this assistance is to facilitate the integration of migrant workers into the urban economy, and to develop the skills needed to support the shift toward an equitable green-growth model.

ADB has also established an Urban Knowledge Hub with Tongji University in Shanghai and a Water Security Knowledge Hub with Tsinghua University in Beijing. These partnerships are aimed at generating and sharing knowledge on sustainable urban development and improved municipal management.

Looking forward, ADB operations will be guided by our upcoming Urban Operations Plan, which will enable proactive response to the challenges associated with transition to the efficient, sustainable, and equitable cities of the future. This response, undertaken with our development partners, will focus on practical ways in which cities can improve the environment, support their economies, reduce inequalities, and support the transition of urban migrants.

As we finalize ADB's country partnership strategy for the PRC, we are committed to supporting the Government's desire to build a harmonious and prosperous society through livelihood improvement, and regionally-balanced and environmentally sustainable growth. We very much look forward to further collaboration with the government on these issues.

The policy study on strategic options is an example of strong collaboration in policy research and development. I am pleased to see that senior officials, top researchers, and experts from think tanks and universities, and international organizations are here today to jointly review the draft reports. I expect and am looking forward to candid discussions. And I hope the seminar is successful in identifying critical steps for optimizing the positive gains of urbanization while managing the impacts and risks.

Let me close with the words of a well-known American architect Hugh Newell Jacobsen who observed: “When you look at a city, it's like reading the hopes, aspirations and pride of everyone who built it.” It is my hope that we will come away from today's discussion inspired to build well – for a healthy, green and sustainable future.

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